AUKUS Export Control Reforms Need More Tweaking, Researchers Say

Although export control reforms by the U.S., Australia and the U.K. could exempt about three-quarters of defense trade between the countries and reduce compliance costs for industry, more updates are needed to remove lingering licensing barriers and address structural challenges posed by the International Traffic in Arms Regulations, researchers said this week.

A new report issued by the Australia-based United States Studies Centre said the three AUKUS countries need to continue building on their announcement earlier this month that previewed what they said will create license-free defense trade for technology that was previously subject to strict ITAR controls (see 2408160019). The report called for more revisions to the State Department’s Excluded Technologies List, which are items that would require an ITAR license regardless of the new exemption, along with other changes that they said will make sure the three nations’ export control systems can overcome ITAR obstacles.

The research group, based at the University of Sydney, said AUKUS-driven reforms “may succeed where previous efforts failed.” But “reform efforts could come to naught if further regulatory adjustments are not made and if lingering barriers to implementation endure.”

The report said people and companies in all three AUKUS countries are worried that “enduring structural challenges posed by the ITAR,” along with the exclusion of “many” technologies from the State Department’s AUKUS-related license exemption, “will stymie cooperation through AUKUS Pillar II and hamper alliance initiatives on precision-guided weapons.”

It called the ETL an “impediment” to AUKUS and “would effectively silo most AUKUS-relevant technologies off from the very regulatory enhancements intended to realise the arrangement’s potential.”

Although the State Department removed some items from its Excluded Technology List in its final rule issued this month, including for some missile technology related items, the U.S. Studies Centre said the agency should go further. It can do this by adopting a “common national policy position” of a “strong presumption of sharing” for license reviews of certain AUKUS-related technology categories covered by the multilateral Missile Technology Control Regime, it said.

All three countries currently “adhere to a ‘strong presumption of denial’ when it comes to MTCR technologies,” the report said, and easing this review policy “would more explicitly enshrine a positive intent to cooperate in national policy settings, and minimise grey area for interpretations to the contrary.”

The three countries should issue a policy statement “regarding discretionary reinterpretations” for export-controlled trade of MTCR items, the report said. “Doing so could facilitate the removal of a greater number of technologies from the ETL, provided that none of the 3 countries adjust their national policy positions in light of these prospective changes to recapture items formerly covered by that country’s policy position vis-à-vis the MTCR.”

The U.S. and Australia also need to address sources of what the researchers said are “taint” in their respective export control regulations. They referred to the notion of ITAR “taint” -- the idea that the use of export controlled U.S. knowledge at the research-and-development stage applies to a product or service forever, and it’s forever “tainted.”

Australia can address this by clarifying its proposed sunset clauses for licensing and reporting requirements, the report said, which specify that export controls are tied to only the “life of the technology” rather than “existing in perpetuity.” The group said Australian officials have “indicated that this sunset period will be a matter of ‘months, not decades,’ with the explicit intention of avoiding the emulation of the perpetual ITAR taint and its side-effects on business compliance costs and engagement incentives.”

It also said the three AUKUS countries should better align their export control review periods to “expedite any future reviews.” Although Congress can mandate more defense export control changes in the upcoming National Defense Authorization Act, the Australian export control review period is “currently pegged at 3 years,” the report said.

“To avoid unnecessary delays in updating AUKUS country defence trade controls in future, the 3 countries should ensure that their review timelines are sufficiently aligned,” the report said, adding that “this could come sooner rather than later.” It pointed to a proposal that, if included in the FY25 NDAA, could order the U.S. administration to soon assess the “effectiveness” of its AUKUS-related ITAR changes.